Composition of Board of Directors and Its Effect on the Performance of Banking Firms: Analysis Through OLS Method

The focus of this study is to determine whether the board's composition affects how effectively banking organizations operate. Since board is the brain and soul of any company, performance of company may be directly impacted by its composition. The composition of the board of directors consists of the total number of directors, the proportion of independent directors, and of women directors. Performance of banking companies is evaluated in terms of Return of Assets (RoA) and Earning per Share (EPS). For analysis ordinary least square method have been applied on 10 year data of India's leading commercial bank. The results show that while the number of directors on the board has a negative influence on the banking company's profitability, independent directors have an encouraging effect on the company's performance. Because there aren't many women directors on the boards of the banking companies this study focused on, the results regarding women directors are ambiguous.